Chinese stocks will not be attractive in 2019

Daily Analysis - 21/12/2018

China’s stocks need a recovery

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Chinese stocks hit hard in 2018, but improvement will not come early. What is expected is a probable rebound not before the second half of the next year some analyst say.

The main Shenzhen dropped more than 30% while the Shanghai composite index fell more than 20% this year. That places Chinese equities between the poorest performers in the world. As for the popular, the S&P 500fell by more than 5.6%, while the German DAX has dropped more16% so far. Finally, Japan's Nikkei 225 is under more than 8.7%.

"There's really not much impetus for the market to rebound," Zhu Ning, professor of finance at Tsinghua University said "The sentiment is not recovering, and there is not new capacity. I wouldn't be too optimistic about the market next year."

Less trade appetite for European stocks drives them lower


 Many European stocks started the day lower today morning, amidst the possibility of further increases in U.S. borrowing charges urging traders to get out of crowded trades. Market viewpoint spoiled during last night following the Federal Reserve mostly held to its policies on increasing interest rates in 2019 notwithstanding increasing dangers to an economic extension. Some of the EU Indexed, on the other hand, opened with a more positive risk appetite like DAX-MAR19 open around 10589.33 while the FTSE-MAR19 at 6610.95.

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Oil prices rise


On Friday Oil rose following the falling of more than 4% in the previous trading session. The reason for this rise is due to indications that OPEC production will cut starting next month which will be deeper than anticipated. U.S. WTI is estimated to descend about 9% this week. West Texas Intermediate crude futures climbed about 33 cents, to $46.20 per barrel. Brent is considered to fall more than 9%.

The Benchmark Brent crude futures went up about 0.5 %, at $54.60 per barrel after falling $2.90 in the previous trading session.

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Dollar near to 30-day Low


On Friday, the popular greenback weakened to close to almost 30-days low. Apparently forced down by a downfall in oil rates, a warning for a U.S. government close down and a sharp sell-off in stocks market.

Following the FED hike plan and the released of a less dovish forecast than investors had anticipated is one of the reasons that drove the USD down. Also, the liquidation of large bullish trades in the dollar, and the start of the holidays appeared to be another reason for the dollar's drop.

On the other hand, the safe-haven YEN benefited from the fragile sentiment. The dollar index versus a basket of six important rivals held at 96.420 after the fall to 96.165 overnight. This is the lowest level since last month.

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